A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of a- of Plateau Casualty Insurance Company and its wholly owned subsidiary, Plateau Insurance Company. Both companies are wholly owned, direct and indirect subsidiaries of the parent holding company, The Plateau Group, Inc. (Plateau), which serves as the Credit Rating (rating) unit. The outlook of these ratings is stable. All companies are domiciled in Crossville, TN.
The ratings reflect Plateaus balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength is indicative of Plateaus strongest risk-adjusted capitalization, positive earnings contributing to surplus growth year over year, and adequate liquidity supplemented by positive operating cash flows. The balance sheet strength is somewhat diminished by Plateaus higher-than-average gross and ceded underwriting leverage, as a substantial percentage of assets are composed of reinsurance recoverables due from unauthorized reinsurers. This concern is mitigated partially by the collateral held, which reduces Plateaus exposure to potential credit risk. Despite the groups modest loss reserve leverage, reserves on its guaranteed asset protection and force-placed automobile programs have developed adversely in each of the past two years.
Earnings have been positive each year, produced from a diversified stream of profits and revenues across a variety of credit insurance-related products and services. Major insurance products include single premium credit life and credit disability insurance, credit-related property insurance, contractual liability insurance, guaranteed asset protection offered by automobile dealers, and debt cancellation offered by commercial banks. The company maintains excellent relationships with its producers and distributors. Plateau writes business in more than 30 states, with some concentration in the southeast. Business is generated primarily by consumer finance companies, commercial banks, automobile dealerships, credit unions and recreational vehicle and powersport retailers, and distributed through general agents and third-party administrators.
Managements expertise and capability in the credit insurance market is considered to be in line with Plateaus risk profile. This market can be influenced significantly by changes in regulations, economic conditions, and credit lending and borrowing practices. All of Plateaus insurance is written in conjunction with the extension of credit and for the most part, represents small individual risks.
The stable outlooks reflect A.M. Bests expectation for continued favorable earnings, supporting a very strong balance sheet. As the company employs its growth plans for the next few years, negative rating action may be taken if the growth strategy is not profitable, or if risk-adjusted capitalization is not adequate to support the growth.
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